"Heavy artillery shelling is ongoing and has left 70 people wounded", Al Jazeera's Jama Nur reported from Mogadishu.

Ba-Hoku Baridgye, a spokesman for the AU mission, said one of its soldiers had died in the fighting, while they killed about 25 Somali fighters.

"We killed around 25 Islamist fighters in Hodan and Holwadag districts today and we lost one soldier while two others were injured," he told AFP.

'Torn to pieces'

The violence started early on Thursday morning when AU troops clashed with anti-government fighters in the south of Mogadishu.

"I have never seen such bloodshed. Nine people died in one spot in Bakara and nearly 20 others were wounded"

Abdiraham Adan, a witness

"I have never seen such bloodshed. Nine people died in one spot in Bakara and nearly 20 others were wounded," Abdirahman Adan, a witness in Bakara, told the AFP news agency.

"I was completely shocked when I saw so many dead bodies, some of them torn to pieces," he said.

The street battles in Mogadishu are the latest in a string of deadly incidents to hit the Horn of Africa nation.

A suicide bomber blew himself up on Monday at the gates of the presidential palace in Mogadishu, an attack blamed by the Somali police on al-Shabab, Somalia's main anti-government group.

On August 23, it announced a major offensive "to eliminate the invading Christians and their apostate government".

Al-Shabab has been fighting the fragile transitional government for three years and now controls much of Mogadishu and huge tracts of southern and central Somalia.

Devastating effect

Somalia has been plagued by anarchy since regional commanders toppled Mohamed Siad Barre from power in 1991. Pirates are active in its coastal waters and have driven up shipping costs in the Gulf of Aden.

Anti-government fighters have used suicide bombers to devastating effect over the past two years, killing five government ministers and dozens of AU keeping troops. Al-Shabab was also behind attacks in Uganda in July that killed at least 79 people.

The AU forces in Mogadishu have focused their manpower on shielding the president and guarding the sea port and airport from attacks.

Sharif Ahmed, the current president, is a former opposition leader. He is seen by al-Shabab as a Western puppet.